750,000 lost jobs? The dodgy digits behind the war on piracy

By Julian Sanchez

If you pay any attention to the endless debates over intellectual property policy in the United States, you'll hear two numbers invoked over and over again, like the stuttering chorus of some Philip Glass opera: 750,000 and $200 to $250 billion. The first is the number of U.S. jobs supposedly lost to intellectual property theft; the second is the annual dollar cost of IP infringement to the U.S. economy. These statistics are brandished like a talisman each time Congress is asked to step up enforcement to protect the ever-beleaguered U.S. content industry. And both, as far as an extended investigation by Ars Technica has been able to determine, are utterly bogus. "I have said it thrice," wrote Lewis Carroll in his poem The Hunting of the Snark, "what I tell you three times is true." And by that standard, the Pythagorean Theorem is but schoolyard gossip compared with our hoary figures. As our colleagues at Wired noted earlier this week, the 750,000 jobs figure can be found cited by the U.S. Department of Commerce, Customs and Border Patrol, and the U.S. Chamber of Commerce, among others. Both feature prominently on TheTrueCosts.org, an industry site devoted to trumpeting the harms of piracy. They're invoked by the deputy director of the U.S. Patent and Trademark Office. And, of course, they're a staple of indignant press releases from the congressional sponsors of tough-on-piracy legislation.

By more conventional standards of empirical verification, however, the numbers fare less well. Try to follow the thread of citations to their source, and you encounter a fractal tangle of recursive reference that resembles nothing so much as the children's game known, in less-PC times, as "Chinese whispers," and these days more often called "Telephone." Usually, the most respectable-sounding authority to cite for the numbers (the FBI for the dollar amount, Customs for the jobs figure) is also the most prevalent—but in each case, that authoritative "source" proves to be a mere waystation on a long and tortuous journey. So what is the secret origin of these ubiquitous statistics? What doomed planet's desperate alien statisticians rocketed them to Kansas? Ars did its best to find the fountainhead. Here's what we discovered.

Looking for lost jobs

First, the estimate of 750,000 jobs lost. (Is that supposed to be per year? A cumulative total over some undefined span? Those who cite the figure seldom say.) Customs is most often given as the source for this, and indeed, you can find press releases from as recently as 2002 giving that figure as a U.S. Customs and Border Patrol estimate. Eureka! But when we contacted CBP to determine how they had arrived at that imposing figure, we were informed that it was, in essence, a goof. The figure, Customs assured us, came from somewhere else, and was mistakenly described as the agency's own. This should come as no great surprise: CBP is an enforcement agency, whereas calculating the total loss of jobs from IP infringement would require some terrifyingly complex counterfactual modeling by trained economists. Similar claims have appeared in Customs releases dating back at least to 1993, but a CBP spokesperson assured us that the agency has never been in the business of developing such estimates in-house.

With Customs a dead end, we dove into press archives, hoping to find the earliest public mention of the elusive 750,000 jobs number. And we found it in—this is not a typo—1986. Yes, back in the days when "Papa Don't Preach" and "You Give Love a Bad Name" topped the charts, The Christian Science Monitor quoted then-Commerce Secretary Malcom Baldridge, trumpeting Ronald Reagan's own precursor to the recently passed PRO-IP bill. Baldridge estimated the number of jobs lost to the counterfeiting of U.S. goods at "anywhere from 130,000 to 750,000."

Where did that preposterously broad range come from? As with the number of licks needed to denude a Tootsie Pop, the world may never know. Ars submitted a Freedom of Information Act request to the Department of Commerce this summer, hoping to uncover the basis of Baldridge's claim—or any other Commerce Department estimates of job losses to piracy—but came up empty. So whatever marvelous proof the late secretary discovered was not to be found in the margins of any document in the government's vaults. But no matter: By 1987, that Brobdignagian statistical span had been reduced, as far as the press were concerned, to "as many as 750,000" jobs. Subsequent reportage dropped the qualifier. The 750,000 figure was still being bandied about this summer in support of the aforementioned PRO-IP bill.